The Indian government is seeking to relax rules on mergers and acquisitions in the telecom sector. The rules are likely to be softened provided there are at least six players after any deal in a specific service area, telecoms minister Kapil Sibal said.

Under existing rules, an operator cannot hold a stake of more than 10% in another company that operates in the same service area.

The telecom companies are also not allowed to acquire rivals that have operations in the same service areas, as rules do not permit operators to have more than one licence in an area.

Sibal said that the government has also referred the issue of bandwidth pricing to an internal panel.

Earlier, the Telecom Regulatory Authority of India had proposed that the price of spectrum be linked to market value.

The new national telecom policy, expected by the end of this year, will replace the one formulated in 1999.